Induction of terminal differentiation represents a promising therapeutic approach to certain human malignancies. The peroxisome proliferator-activated receptor γ (PPARγ) and the retinoid X receptor α (RXRα) form a heterodimeric complex that functions as a central regulator of adipocyte differentiation. Natural and synthetic ligands for both receptors have been identified. We demonstrate here that PPARγ is expressed at high levels in each of the major histologic types of human liposarcoma. Moreover, primary human liposarcoma cells can be induced to undergo terminal differentiation by treatment with the PPARγ ligand pioglitazone, suggesting that the differentiation block in these cells can be overcome by maximal activation of the PPAR pathway. We further demonstrate that RXR-specific ligands are also potent adipogenic agents in cells expressing the PPARγ/RXRα heterodimer, and that simultaneous treatment of liposarcoma cells with both PPARγ- and RXR-specific ligands results in an additive stimulation of differentiation. Liposarcoma cell differentiation is characterized by accumulation of intracellular lipid, induction of adipocyte-specific genes, and withdrawal from the cell cycle. These results suggest that PPARγ ligands such as thiazolidinediones and RXR-specific retinoids may be useful therapeutic agents for the treatment of liposarcoma.